Texas competes internationally for new industries and we like to think of ourselves as a great place to do business. The good news is that those who create jobs and growth in the world economy agree with this assessment of Texas' strengths. The Texas economy is now growing at a rate that outpaces the rest of the nation, with steady increases in both the number of total jobs and personal income growth.

One factor in maintaining this momentum will be to ensure state lawmakers continue to spend our citizen's money carefully. Controlling state spending is the key to keeping business taxes affordable for those who create these new  jobs.

Maintaining a competitive edge also means carefully considering the tax structure we employ as a state to fund the essential operations of state government. Tax policy matters when it comes to attracting and retaining employers, and Texas is recognized as a national leader in this regard.

The Tax Foundation, a nonpartisan organization committed to educating taxpayers about sound tax policy, puts out an annual report that ranks each state's business tax climate. The rankings are based on how well a state's tax system encourages investment, and the foundation especially focuses on states which maintain a broad tax base with a low rate. I am pleased to report that Texas' business tax climate was ranked 6th in the nation for fiscal year 2007, up one spot from our rank of 7 in fiscal year 2006.

Five components are considered in determining these rankings. The Tax Foundation looks at a state's corporate tax, individual income tax, sales tax, unemployment tax, and property tax. Texas is helped in these rankings by our absence of an income tax. We were also given positive marks for our newly reformed business tax.

Texas' beneficial business tax climate was improved by recent special session legislation that revised the failing franchise tax. This legislation instituted what the foundation thinks is a critical component of a good business tax climate, a broad-based tax with a low rate. Under the new system, more businesses will pay the tax, but it will be at a low rate with an option for each business to exempt either their inventory or their payroll costs. There are also exemptions for businesses with less than $300,000 in revenue to encourage small business growth.

The other side of this tax equation that I believe will help our state's economy is the aggressive reduction in local school property taxes enacted by the Texas Legislature earlier this year. High rates of property taxation were one of the areas of taxation policy that were seen by potential employers as a negative in our state. The new school finance system cuts local school property taxes by one-third and provides a real boost to capital-intensive business like manufacturing that require large investments in land, buildings, and machinery.

While issues like tax policy may seem less exciting than others that come before the Texas Legislature, they rank among the most important topics we debate. These are policies that directly impact investment decisions by both major employers and small businesses.

To sustain a growing economy, we need to make sure Texas' taxation and spending policies are developed with careful thought regarding those who actually pay the bills. After all, taxes paid by Texans are not really "government money". These are still your dollars, which you justly expect to have spent prudently on your behalf on a limited number of government functions.

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